In the last couple of years I have seen sign posted on street poles advertising "Rent to Buy". I was wondering if anyone knows how this sort of thing works. I have a property I want to move and I am looking outside the square due to the poor market in the area.
It's like buy before you try. it's vendor finance, a way to buy property without a tradition bank loan.
A (seller) sells a property to B (buyer)
B rent for X amount of money and on top of the rent B offer Y amount of money to secure the agreed price.
then B agreed buy the property for Z amount of money in S amount of time.
A can't sell house to someone else other then B for predetermined price Zso the A gets X + Y
the B pays X + Y
after S years B pays A Z amount of moneyhi i would like to know as well but can someone other than an abbot and Costello skit (w = explain it )
Cracking response. It took me a little bit of time to digest it.
So what you are saying is that there is a contract of sale put in place with an extremely large settlement period or there is a lapsed date that the deal falls through. Is there also a contract for the rent or is that tied in with the contract of sale.
Does B pay A anything at all apart from rent to secure the property or is it just a higher rent? Is the vendor finance for the entire amount or just the deposit amount. Does the title change hands / when does it change hands.
My reason is I have 500K tied up in the property and I would like some of it back to reinvest in another property if possible. That is the reason I ask if the vendor finance is for the entire amount.
Does anyone else have any experience with anything like this?
hi this is what i think its all about : say you buy a house that's worth $360k but you do a little haggle with the owner and for a fast sale you end up buying it for $300k
then you offer it as a rent to own but the offer is for the price of $360k or even higher —say it costs you $3oo per week on an interest only loan :under contract you then charge the rent to own buyers the amount that would cost them to pay off a $360k or higher loan
plus you ad on extra amount to cover there deposit say $100
so for a house you only pay $300 per week the rent to own pay you $400 per week to cover loan amount and $100 extra as there deposit
if at any time the rent to own buyers fault on this you only have to pay them the amount that has accumulated for there deposit : you are there bank so to speak :
when the rent to own buyers have enough deposit saved they then go to a bank for a real loan and pay you the agreed amount that is in the contract for the house :
the rent to own people must earn enough of a wage to afford to pay you the $400 – $500 you charge per week : its a system that helps buyer save for a deposit and own a house and its a good way for you to profit — im not %100 sure but i think thats how it worksHi Martin
As Rent To Buy is one of the 3 most popular vendor finance (VF) strategies and because there are a couple of misconceptions above, I suggest you do some general research about VF. Some suggested places to start are:
https://www.propertyinvesting.com/strategies/wraps
https://www.propertyinvesting.com/strategies/lease-options
http://negative2positive.com.au/information/about-vendor-finance
http://www.vendorfinancelawyer.com.au/vendor_finance_intro.htm
http://www.vendorfinance.asn.auThe second link above is the one about Rent To Buy's, i.e. a Lease along with an Option.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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